What makes you so worried about the future of online? I thought it was the gift that keeps on giving…
Well, it certainly was, in the days and months of lockdown where every business that wanted to stay in business needed to switch to online. That was the time when we all fell in love with online shopping as that was the only way we could shop. Across the wine industry we saw producers, wine importers, distributors and merchants all switching their resources to building up new online wine platforms – mostly to great success. Sales and customers simply fell through their digital doors and it seemed online was the future for all.
So what’s changed?
Look around you and analyse just how many of those wine businesses have kept their focus on online and kept up their commitment to driving online sales now that the market has returned to normal and we can all go back to the way things were before Covid-19. Many have been faced with the reality shock that those online sales that just kept on coming in lockdown were not down to their all alluring and well sourced wine range and wonderfully designed website, but the fact they simply had wine available to sell. Now the digital penny has dropped as to just how difficult and expensive it is to make an e-commerce website work, many have quickly retrenched and gone back to how they did business before lockdown.
How expensive can it be?
Depends who you are and what you want to do. But to acquire any customer online takes time and money. At one end of the scale Amazon is said to spend up to £150 acquiring a new customer, Facebook closer to £50 (Outbound Engine). Within wine that cost will vary enormously and could be as low as £15, or as high as £80 depending on your business model. But you then have to keep on spending in order to keep those customers coming back, never mind attracting new ones. An online player is like a shark. It has to keep moving forward, spending money to stay alive. It’s why the highest spenders on paid search are the specialist wine retailers - Majestic, Virgin Wines and Laithwaites. Even they can’t rest for a minute and have to keep spending and investing to stand still, never mind move forward.
If it costs so much surely it’s good business sense to pull back on their online platforms?
It would be if the consumer had also retrenched, gone back to the way they were and had also stopped shopping online. As countless marketers will tell you habits formed in the pandemic are here for the long term. Look at the figures. Total online retail sales before Covid-19 were 19.8% in December 2019, by December 2022 they were 25.7% (ONS). Online’s total share of wine sales is said to hit 15.9% in 2023 compared to 8.1% in 2019 and is on course to top 20% in 2025 (Statista). Wine is already one of the most searched for categories online with 18.6m keyword searches on Google in the year to May 2022 vs 11.9m in 12 months to May 2019. Google searches for online wine subscription services are up 133% compared to pre-pandemic.
What should those companies that have turned their backs online be doing?
They need to come back and quickly. OK, we are not going back to lockdown levels of online wine buying, but the consumer has changed for good, thus your business model needs to change, too. Any producer, brand, importer, or clearly a retailer, that wants to have a sustainable future, needs to be online. Those businesses that are online, and investing seriously in it, have a major competitive advantage. Those are the companies that producers and brand owners will want to work with. Yes, it might be particularly difficult in these hard trading and testing economic times, and certainly challenging for your bottom line. But, businesses need to look at online investment not as “marketing spend” but the cost of being in business. The cost of working in the wine industry at all. If you don’t then don’t be surprised that those companies that are fully committed and are making the necessary investment to succeed online don’t come and take more of your business away from you.